China Reaffirms Pledge To Reform Capital Markets

China pledged on Friday to push ahead with a broad range of capital market reforms as it seeks to encourage more efficient capital allocation, increase foreign investment and improve transparency of its markets.

In a wide-ranging statement of policy principles, the State Council said it would develop a system for direct bond issuance by local governments, streamline the approval process for initial public offerings (IPOs), and remove some restrictions on the use of financial derivatives.

Separately on Friday, the Securities Association of China issued new rules governing IPOs.

While the government has previously discussed many of the reforms mentioned by the cabinet, the statement signals a fresh commitment to pushing ahead with the proposals.

Quotas would be increased for both inward and outward foreign investment under the Qualified Foreign Institutional Investor (QFII) and Qualified Domestic Institutional Investor (QDII) programs, the cabinet said.

“China’s capital markets are still not mature, and some systemic problems still exist. New problems are continually appearing,” the State Council said in a statement posted on its website late on Friday.

“We will persevere with market-based and rule of law-based orientation and uphold open, equal, and fair market order,” the statement said.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza